Reserve price sale confirmation requires borrower and creditor consent; alternative remedy and res judicata did not bar writ review.

Rule 9(2) of the Security Interest (Enforcement) Rules, 2002 was interpreted to require consent of both the borrower and the secured creditor where the bid is not higher than the reserve price; a bid at par with the reserve price was treated as insufficient to support confirmation without that consent, making strict compliance with the sale procedure mandatory. The writ remedy was also held not to be barred merely because a Section 17 remedy was available, where the dispute involved a pure question of statutory interpretation. Res judicata and constructive res judicata were rejected because the earlier proceedings did not finally decide the legality of sale confirmation.

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Issues: (i) Whether a sale of secured property could be confirmed under Rule 9(2) of the Security Interest (Enforcement) Rules, 2002 when the highest bid was only equal to the reserve price and there was no consent of the borrower and the secured creditor. (ii) Whether the writ petition was barred by the existence of an alternative remedy, or by res judicata or constructive res judicata, because proceedings under Section 17 were pending and earlier writ proceedings had been decided.

Issue (i): Whether a sale of secured property could be confirmed under Rule 9(2) of the Security Interest (Enforcement) Rules, 2002 when the highest bid was only equal to the reserve price and there was no consent of the borrower and the secured creditor.

Analysis: Rule 9(2) was read as creating distinct situations for confirmation of sale. Where the bid is higher than the reserve price, confirmation may follow subject to the secured creditor's approval. Where the price is not higher than the reserve price, the statutory text requires consent of both the borrower and the secured creditor before the sale can be effected. The Court held that a bid at par with the reserve price is not a price higher than the reserve price. Since the secured property was sold only at the reserve price and the borrower had not consented, the authorised officer could not validly confirm the sale. The procedural safeguards in the Rules were treated as mandatory and not as mere technicalities.

Conclusion: The confirmation of sale without the requisite consent was invalid and unsustainable.

Issue (ii): Whether the writ petition was barred by the existence of an alternative remedy, or by res judicata or constructive res judicata, because proceedings under Section 17 were pending and earlier writ proceedings had been decided.

Analysis: The Court held that although a remedy under Section 17 existed, the present dispute turned purely on interpretation of the statutory rule and did not require adjudication of disputed facts. In such circumstances, the availability of an alternative remedy was not treated as an absolute bar. The plea of res judicata and constructive res judicata was also rejected because the earlier round of litigation concerned interim relief and did not finally determine the legality of confirmation of sale. The specific issue now raised was neither directly nor indirectly decided earlier.

Conclusion: The writ petition was maintainable and was not barred by alternative remedy, res judicata, or constructive res judicata.

Final Conclusion: The sale confirmation was set aside, the secured creditor was left free to proceed with a fresh auction in accordance with law, and the borrowers were left open to redeem the liability as permitted by the statute.

Ratio Decidendi: Under Rule 9(2) of the Security Interest (Enforcement) Rules, 2002, a sale at or below the reserve price cannot be confirmed without the consent of both the borrower and the secured creditor, and mandatory statutory sale procedure must be strictly complied with.

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